>> of the $787 billion economic stimulus bill signed into law a little more than the year ago, about $360 billion has been committed to states for projects, but the $3 billion from last week. a little over $200 billion has been paid out so far. to read more about the project being funded, go to our web site c-span.org. .

>> an independent commission on wartime contract is looking into the performance of military contractors in the rack. in this hearing held at the end of last month, the hearing heard from the defense department officials as far as oversight and independent contractors.

this portion is 2.5 hours. >> we are here today to talk about transitions in iraq, march 20, was the anniversary of the allied invasion of iraq.

american combat operations there have lasted almost twice as long as the american civil war or u.s. involvement in world war two. american involvement in iraq will continue for many more years in the form of political engagement and support for good governance and economic development. the end of our active military involvement there is in sight. the president has directed that american military forces in iraq the reduced to no more than 50,000 by the end of this august. our agreement with the government of iraq calls for american troops to be out of the country entirely by the end of 2011. the u.s. troop drawdown is welcome news. it reflects significant success based on hard work, bravery, and sacrifice by coalitions and iraqi forces.

extremists and terrorists still lashed out at military and civilian targets but it has become less of a threat to the government of iraq. conducting the drawdown is not a simple task, like turning down the thermostat. thousands of troops must be redeployed. thousands of contractor employees must be reassigned or released. hundreds of military bases have to be closed or handed over to the iraqis. millions of items of equipment, whether military or acquired by contractors and now government- owned, must be moved, donated, were scrapped. the bulk of this work will fall to contractors. they have been a vital part of u.s. operations in iraq from the outset. we expect a government contract employees will exceed 70,000 by

the end of august. this is delete 1.5 times the u.s. troop strength charge -- for artists. -- for august. this reflects the reduction in the size of the u.s. military since the end of the cold war as well as the extent of support services required for contingency operation. those services include construction, dining facility and laundry operations, based security, transportation, equipment and much more. we do not expect contractor employee numbers to decline in great amounts with the reduction in troops. a minimum number of people are needed to operate dining facility or guard a base perimeter and some staffing flexibility is needed to meet sudden demand. nonetheless, the contractor to military ratio expected in august requires looking carefully at our contractor

planning and management arrangement. the historical records shows that the united states went to iraq assuming a quick victory, swift hand over of power, and a rapid exit and therefore made no plans for contracting, managing, and auditing the reconstruction of support for a long stay. after seven years of sacrifice at enormous cost, we are examining whether planning and management of contract and for the drawdown is adequate and effective. kbr expects to have 30,000 employees in iraq by late summer of this year compared to more than 60,000 in march, 2009. the planning for synchronized contractor drawdown with military needs does not appear to be as advanced as the military planning for moving its own personal and property. part of the reason for that may be that the u.s. military has yet to make key decisions that

will affect contractors drawdown plants. the government does not seem to be giving contractors adequate guidance on events and requirements for them to trim or redeploy workforces appropriately. we need proper mechanisms to ensure contractors are drawing down their personnel in iraq consistent with the reduction in military forces and with operational requirements. military needs the right number of contractors and -- in the right places as the drawdown continues. taxpayers need assurance that contractors do not have all necessary staff and around, accidentally or by design, without work. and still dropping pay. -- drawing peg. ay.

as we have seen in earlier hearings, logcap 3 is competitively awarded. under this contract, the sole vendor kbr has collected $15 billion in just the past three years, far more than anyone could have anticipated when the involvement began. work continues under logcap 3, but the intent is to transition to work to logcap 4 test three vendors. each of them must submit an offer for every new test order issued under the contract. the aim is to sharpen competition on price and performance. on february 26, kbr won the first competition for logistic support, pulte service, and

theater transportation. they collected as much as $2.3 billion under this one test order. even with the drawdown under way, such big expenditures raised important questions about government requirements, business planning, and contract oversight. for example, why has the transition taken so long? does it still make economic sense to conduct the transition? this is close to our military exit from iraq. we have two panels today. one panel will comprise senior officials and the other will feature two executives representing kbr whose employees account for half of all employees in that country. we are interested in a government panel's view on planning and management -- managing contractors during the drawdown and the logcap trend kitchen. we look to kbr its view of those plans and procedures for

downsizing the direct work force and its recommendations -- the iraq work force and its recommendations. we want to explore alarming data revealed an audit by the defense contract audit agency and the inspector general of the department of defense. those agencies with use of kbr logistics support services include tactical vehicles meant work under logcap 3 which found utilization rates at or below in percent and are make regulations require at least 85%. for the year ending august 31, 2009, the dod calculated that this under-utilization at about 4.6 million of the 5 million charge for this work, 92% of the cost was not necessary. kbr reported its labor

utilization rates but the report says the army did not adequately reviewed the data or require corrective action. we want to know why. we also want to ask kbr about a sense of responsibility for managing a work force that was clearly too big for the work being done this case study raises serious questions about overall contractor performance and government oversight. our first, as three witnesses. each had deepened direct knowledge of the issues that concern is today. lieutenant general james belpre is the commanding general of army materials. -- lt. general james pillsbury. patrick fit to gerald, director of to read -- a defense contract

agencies. dcaa is working at the request of the contract management agency, dcma, to determine whether kbr is reducing its work force in iraq commensurate with the military drawdown. james loehrl is responsible for u.s. army contract. logcap 3 and 4 are under his jurisdiction. we have three witnesses representing kbr and address our concerns about the company's performance and the adequacy of government planning and oversight of their projects. douglas horne, guy lebeau, and

we have at our witnesses to summarize their testimony in five minutes. we will allow for questions but given the length of my statement, i will be a little flexible. the full text of their statement will be entered into the hearing record and posted on the commission's website. we also ask that witnesses submit additional information that they can provide in response to any questions for the record within 15 business days following this hearing. the commission appreciate the cooperation of all of our witnesses and we look forward to an informative session. the iraq drawdown and contract work contractlogcap are operations of enormous importance. today's hearing will help us judge the status of those

operations and identify areas that need improvement. with that, i have introduced our witnesses and i would like them to stand and i will swear you win. -- i will swear you in. >> thank you for the opportunity to report on the u.s. army material put progress. i am lieutenant general james pillsbury. i have a short opening

statement. amc is a global enterprise was more than 66,000 police located in 48 states in 127 countries. i would like to share some our recent accomplishments in contract support. the progress in arms contingency contract and operations is a direct result of our aggressive in commission of our recommendations in the 2007 report and as commissions intensity to ensure compliance the report recommended the army increase the stature of military contracting personnel. we did this as the army established five jungle officer positions to provide the experienced senior leadership important to our efforts. the army has also established that our nco's have a career path with which to excel.

we facilitated contract in in operations. we did this we week implemented the army contract in command and the expeditionary command. each of these organizations is dedicated to ensuring professional, ethical, he efficient, and response of contract and within the army. thirdly, it was recommended that we provide training and tools for contract and in expeditionary operations. we have enhanced the training of the work force and acquisition support staff to build the skills necessary to support the war fighter. the army has added an improved multiple acquisition training course including instruction in 16 officer and noncommissioned officer courses. this included operation contract support scenarios for contracts

and officers representatives during mission readiness exercises prior to deployment. i just came out of fort leavenworth this weekend. i was surprised and glad to hear that all students get 10 hours a contract in training at the staff college. in addition to required defense acquisition training, the army has also entered required ethics training. this is provided to units prior to deploying. the army issued an eexecution order to determine the number of personnel required to carry out certain positions. in 2009, we conducted a comprehensive assessment to

enhance the visibility of contractors on the battlefield. this is a great tool as we get a better -- better visibility of our contractors. regarding our role in the iraqi drawdown -- we are operating in the direct support of american forces as they conduct a responsible drawdown. we have focused our attention in accountability, total asset visibility, triage equipment and timely support for equipment. my boss asked me to leave -- believe the response force for this task force is physically located in kuwait and helps synchronized movements of equipment out of iraq and on to afghanistan. we acknowledge the concerns raised by the gao regarding planning for the use of

contractors. as a result, we have moved aggressively to remedy shortcomings by developing a drawdown plan. working with the combatant commanders in theater, we have established a process for identifying equipment access to requirements we can then re- tribute. -- read-distribute. >> you can read slower. i will give you more time. >>ñr in closing, amc is active police supporting the united states forces in iraq and central command and remain thoroughly engaged with all of our stakeholders to assure an efficient and effective drawdown of all forces from iraq. we maintain the highest standards of storage of while supporting the standards of our or fiber on the battlefield.

i think the commission for highlighting our role in the drawdown and i look forward to your questions. >> we appreciate all your service to our country. thank you. >> members of the commission, thank you for the opportunity to appear before you today. as requested, i will highlight our initiatives in support of the contingency mission and provide an update to our october 2009 report. i assumed the duties of the director of the defense contract audit agency in november, 2009. previously, i served as the auditor general of the army and led the audit agency. during my more than 30 years of government service, i have held a wide variety of a quarter and field assignments in the u.s. army. dating back to may, 2003, dcaa

has supported contingency operations with 240 auditors. they have volunteered to serve in iraq, kuwait, and a afghanistan. we also support the contingency operation at multiple u.s. field offices. through february, 2010, we have issued over 3000 reports in support of in-theater contract. s. as requested, i would like to take this opportunity to briefly update the commission on four current initiatives we are taking to ensure we remain responsive to the war fighter and the taxpayer. the first initiative involves increasing the number of resources we are devoting too contingency operations. in 2010, we made significant increases like increasing our presence in afghanistan.

we have also doubled our work force devoted to logcap contractors in the u.s. from 55 in 2009 to roughly 110 this year. secondly, we are reassessing the workload in the theater to make sure we are volatile of the rest can provide the proper oversight. as part of this process, we have met with general officers in theater and with the armed material command leaders to understand their future workload and their requirements. we believe we are seeing positive effects from this effort as our level of involvement has increased in recent months. third place with respect to contractor business systems, we are revising our process for evaluating contractor business systems in response to the concerns raised by the gao. our revised approach will increase in increased transaction testing while ensuring that efficiencies -- deficiencies are reported on a real-time basis. i directed my staff to resume

the proper audits. where contractors have asserted that they have reported deficiencies, we are committed to evaluating their corrective actions in a timely manner. our last initiative is to increase our efforts on economy and efficiency. during 2010, we are on track to incur over 12,000 hours performing audits in iraq, afghanistan, and kuwait. that is about 240% increase from our prior years. we continue to find opportunities for improvement. for example, we reported in an audit requested by the defense contract management agency that kbr could avoid $21 billion in future costs by trimming back excess labor costs.

we also recently suspended about $1 million or an audit revealed that kbr was slow to reduce personnel and dining facilities as directed by the contract in office. we will continue to evaluate the effectiveness and efficiency of contractor operations during the drawdown. i will provide an update on the dcaa report that revealed kbr's operations in iraq in light of the drawdown. there were ineffective in managing their staffing level during the planned drawdown. we estimated that a more effective management of kbr's work force could save the government approximately one of $93 million. in response to our report, kbr briefed the army on its latest drawdown plan for it the february 23 plan calls for overall staff reduction of about 38% through august, 2010. we have initiated a follow-up

review of the plant. although we have not drawn any conclusions to date, we are evaluating the specific plan to obtain a thorough understanding of the plan assumptions and the basis for those assumptions. kbr proposes a supported head count of about one under 89,000 in august, 2010 which is significantly higher than cover government as his thoughts about 105,000. about 60% of their staff reductions occur within the final month of the current. a performance, july, 2010, august, 2010. we will issue our follow-up report as soon as we complete our audit. i want to assure you that dcaa is committed to providing the proper audit coverage of overseas contingency operations to protect the public's interest. supporting this effort is my top priority. i would like to say that i am very proud of dcaa's dedicated

auditors who support our critical mission day in and day out. i appreciate the opportunity to testify before you today and look forward to answering your questions. thank you. >> thank you, mr. fitzgerald. >> members of the commission, with your approval, i will present a statement and ask that my written statement be entered into the record. it is my privilege to be here representing the united states army material command as well as the service members and civilians supported by the logistics augmentation program. i thank you for the interest in logcap and the services we provide. we are a critical world wide army augmentation program.

it has grown rapidly over the years from 2001- present from $55 million to an annual value of nearly $6 billion. we provide critical logistics and life support services for fighting forces, freeing them to focus on their core mission, combat. in 2004, the army developed a contract and strategcontract int future efforts. the strategy formed a preliminary objective. the number logcap program will increase capacity and incentivize contract performance. after extensive coordination with the department of defense and sister services, combatant commands an industry, the army determine the best acquisition approach was to award a single logcap contract.

it was awarded on february 16, 2007 to obtain support services such as planning, cost estimating, logistics management, and management analysis in support of the logcap program. the army awarded 3 indefinite performance contracts to dynacorp and others on june 27, 2007. the performance on those contracts did not begin until it -- until april 7, 2008. 12 test orders have been awarded including nine test orders and three task orders for project management offices. $1.8 billion has been obligated under the logcap 4 program.

in june, 2007, the army developed its overarching transition strategy and establish the order of transition by country progressing from a relatively small-scale operation in kuwait to what was expected to be a stable russia. -- operation in afghanistan and iraq. the army began its transition everett's conducting fair opportunity opportunities for the requirements. we awarded all three of the kuwait task orders by 2008 but we were delayed by moving to transition of the work by serious protests. the government accountability office dismissed the protests, allowing us to proceed and transition was completed in june, 2009.